Argentina : the Kirchner reign continues

Cristina Kirchner was re-elected by a landslide on 23 October. The Kirchners, first him, then her, promised stability after financial catastrophe. And they did deliver, but at what long-term cost to Argentina and its people ?

par Cécile Raimbeau,
novembre 2011

Valdemar, a lawyer in his fifties, said : “Néstor and Cristina have taken measures that even socialist governments haven’t.” This surprised his friends, who had met in a modest home in Florencio Varela, a district of Greater Buenos Aires. It was July three months before the presidential elections and they were talking about the Kirchners, or the Ks, as Argentinians refer to the couple who have run the country since 2003.

Néstor Kirchner came to power first, with a promise to “consolidate the national middle class” [1] ; then in 2007 his wife took the reins. On 23 October she was re-elected with a landslide victory, 53.8% of the votes. Our hosts, Neka and her partner Alberto, once belonged, like Valdemar, to a far-left organisation that rejected the entire political class. Its aim was to change the world without taking power, so Valdemar was an unlikely Kirchner supporter. Would the old guard in this organisation, which never had more than 1,400 members,agree with him ? “Every one of them,” he said, exaggerating slightly. “Society is so polarised that if you’re not against the Ks, everyone thinks you’re for them.”

Twenty years ago, Argentina was the IMF’s favourite child. When he took office in 1989, President Carlos Menem followed a neoliberal course, to the delight of the financial world. His government sold off many state-owned companies to foreign investors and, in a bid to vanquish inflation, pegged the value of the Argentinian peso to the US dollar.

‘Out with the lot of them !’

Inflation fell, but so did exports. Hampered by an overvalued currency, industrial output ceased to be competitive. Debt exploded from $7.6bn at the start of the 1970s to $132bn by 2001, a more than 17-fold increase. The official unemployment rate soon reached 18% [2]. When on 5 December 2001 the IMF refused a loan to the Argentinian government, the country could no longer meet its obligations. There was a debt crisis and panic in the banks. The economy was paralysed. Argentinians took to the streets. The Solano Unemployed Workers’ Movement (MTD), which Neka, Alberto and Valdemar took part in, was one of many piqueteros (pickets) organisations, named after the unemployed who blocked the streets, chanting : “Out with the lot of them !”

“We got it wrong in 2001,” Alberto says. “We shouldn’t have just hoped that they would go. We should have kicked them out.” This debate remains live : has the political class, which the people booed to an accompaniment of clattering saucepans, really renewed itself ? Do the Kirchners represent a break with the past, or continuity ?

After two years of political instability, Néstor Kirchner came to power in 2003, a little-known former governor of the state of Santa Cruz in Patagonia, who came to embody change thanks to his Peronist rhetoric [3], which promoted the defence of national interests. In his first months in office, he managed to get the Supreme Court to rescind the amnesty laws and reopened the trials of those in the military who were suspected of crimes during the dictatorship (1976-83). His popularity was guaranteed. And now, with this October’s victory, his wife seems to have surpassed him.

“The MTD failed in 2005, partly because of Néstor Kirchner’s repression and policy of counter-insurrection,” said Alberto, a former priest who took to activism. He suggests that the piqueteros who were not destroyed were won over by those in power. Neka said : “The Kirchners sucked the lifeblood from some organisations and divided others, but their policy stems from our rebellion.”

Valdemar listed the Kirchners’ measures : the right to work, in particular the signing of more than a thousand labour agreements, principally in industry. To contain social unrest, Kirchner renewed links with the General Workers’ Confederation (CGT), the heir to a bureaucratic trade unionism that had been the government’s backbone during the Per—n era. Joint meetings led by the government, this powerful union and the bosses allowed better working conditions to be negotiated in the leather, food, transport and communications sectors.

Valdemar also mentioned the June 2011 law on business bankruptcies, which is more favourable to cooperatives and worker-run businesses, since it grants employees the chance to use their redundancy payments to acquire the machinery and buildings of the companies where they used to work. “Of course, they could have gone further” : the law does not meet the compulsory purchase demands in favour of workers who “salvaged” their companies during the crisis years.

Also notable are the new media law (2009), which prevents the formation of monopolies and gives a third of the available spectrum to non-profit organisations ; gay marriage (2010) ; and the renationalisation of pensions privatised under Menem (2008). Not to mention new social security programmes.

Virtuous circle

In 2002 the piqueteros in the suburbs survived through collectively run canteens. “Today, with universal child benefit (Asignaci—n Universal por Hijo, AUH) and the Argentina at Work programme, it’s not a time of plenty, but everyone has enough to eat,” said Neka. The AUH, created two years ago by Cristina Kirchner, is her most popular policy : the allowance rises to 230 pesos ($54) per child (around 10% of the minimum wage) and is paid to more than 1.8 million households. Unlike previous social programmes, often considered as “favours” granted to a limited number of the poor, this allowance is a right.

The Argentina at Work programme provides jobs part-funded by the state within the social economy. Two hundred thousand posts have been created in the greater Buenos Aires area. But the salaries are below the minimum (around 2,300 pesos or $544), and organisations that represent the unemployed complain that cronyism sometimes influences who gets jobs.

Argentina has a growth rate which Europe can only dream of : over 9% in 2010. This success is in the first instance down to a measure taken before Néstor Kirchner came to power, the abandonment of the fixed peso-dollar exchange rate in 2001. With a free-floating exchange rate, the national currency collapsed. The real value of average salaries plummeted by 30%, but the devaluation galvanised trade exports. The rise in world commodity prices benefited the primary sector, especially the export of GM soya. GDP, which dropped more than 10% in 2002, rebounded by 8% the following year. Profiting from this windfall, the Kirchners funded a redistribution policy. Their public expenditure fed an economic virtuous circle.

Since 2002, neoliberal analysts have been alarmed. Between 2005 and 2008, there was not a single year, according to the economist Pierre Salama, without extremely pessimistic growth forecasts [4]. And even today, these “orthodox” allies of the neoliberal opposition predict serious difficulties and the return of hyperinflation. They praise the debt restructuring undertaken by the Kirchners, and advocate going further by cutting public spending.

Recycling debt

The Kirchners succeeded in 2005 in getting the country’s private creditors to exchange their securities, on which the country had defaulted, for new obligations with a 60% markdown in value. In 2006, aided by a loan from Venezuela of $2.5bn, the government paid off all its IMF debt early ($9.8bn), saving $900m in interest payments. The IMF, which had until then dictated policy to Argentina, found its influencereduced. The Kirchners’ policy was not without ambiguities. Five years on, Cristina Kirchner proposed a new securities swap to bondholders who had turned down the 2005 offer, investors whom her predecessor said would never be repaid. “Now, apart from some new loans, the current debt is the same as the one contracted under the dictatorship, which was declared illegal by a federal tribunal in 2000. It has been recycled and refinanced by an absurd mechanism full of illegal contracts,” according to Alejandro Olmos, of the leftwing Proyecto Sur party, who advocates an audit of the Argentinian debt similar to that launched by Ecuadorean president Rafael Correa.

Between 2002 and 2009 the percentage of the population living in poverty fell from 45% to 11%, according to the UN’s Economic Commission for Latin America and the Caribbean [5]. But inequalities remain. Some 36% of the active population still work in the informal economy. “A substantial improvement has indeed been recorded in all aspects of human development but, from 2008, job creation has stagnated and improvements have plateaued,” says Dan Adaszko, a researcher at the Observatory on Social Debt at the Catholic University of Argentina. The problem is inflation. The government first played this down before recognising the reality. Independent organisations estimate that inflation is running at 25% a year.

Benefiting business

To curb this, Cristina Kirchner intends to contain wage demands through social dialogue, with the support of the CGT. “Controlling wage rises is mainly beneficial to businesses,” says Eduardo Lucita of the Economists of the Left organisation. In spite of wage rises labour costs have been practically stagnant since 2001 because of average productivity increases of 25%. According to Lucita, inflation stems mainly from the unreasonable benefits enjoyed by a few major companies. This also appals Julio Gambina, a professor of political economics and a member of Attac (Association for the Taxation of Financial Transactions and Aid to Citizens) in Argentina : “Since 2003 the economy has continued to be concentrated in the hands of a few large companies, particularly foreign ones, which repatriate their profits.”

Many collectives also have also denounced the expansion of GM soya growing, which already covers more than half the cultivated land in the country (18m hectares). This drives peasants and Indians off the land and into a precarious existence in the cities. The fight against open-cast mines, which use cyanide and mercury, has become an issue. A law on the protection of glaciers was voted through by parliament but vetoed by Cristina Kirchner. The intervention of the powerful Canadian company Barrick Gold is suspected : it is planning to extract around 500 tonnes of precious metals from the cordillera, without worrying over melting ice.

Many activists on the left would have liked to see the state challenge the interests of the transnationals more forcefully. The Kirchners have always been keen not to upset serious, productive capitalism. Gambina says : “Two ailing businesses, the post office and the national airline, Aerolineas Argentina, have been renationalised, but not the major public services which were privatised in the 1990s. The exploitation of resources gas, oil and mining remains in the hands of large European and American groups.” He says that Cristina Kirchner does not copy the interventionism of Per—n, though he is held up as a model : during his first term, he created an industrial credit bank and a merchant navy, and nationalised the central bank, the railways and electricity.

[3] Named after Juan Domingo Per—n, president from 1946 to 1955 and 1973-4. His first term in office was marked by political nationalism with authoritarian tendencies and strong state intervention in the economy.